The outcome of Japan Steel's acquisition of U.S. Steel is expected to be determined in early next month. Japan Steel has demonstrated its intention to succeed in acquiring the company, which was previously denied by the administration of former President Joe Biden, by proposing a whopping additional investment of $14 billion (approximately 19 trillion won), which is 10 times the original plan. If the Trump administration allows Japan Steel's acquisition of U.S. Steel, it is anticipated to lead to direct competition with domestic steel companies that are establishing steel mills in the U.S.
According to the steel industry on the 23rd, the Committee on Foreign Investment in the U.S. (CFIUS) finished its review related to Japan Steel's acquisition of U.S. Steel on the 21st (local time). CFIUS has the authority to assess the impact of foreign acquisitions of U.S. corporations on national security and recommend that the President block transactions if there are concerns about threats. President Trump is expected to make a final decision on the approval by the 5th of next month based on the results of CFIUS's review.
Japan Steel announced that it has agreed to acquire all shares of U.S. Steel for $14.9 billion (approximately 20.6 trillion won) by December 2023. This figure is double the proposal made by Cleveland-Cliffs, which originally pursued the acquisition at $7.2 billion. However, the Biden administration denied the acquisition in January of this year, citing potential national security concerns just before Trump took office.
President Trump initially expressed opposition to the sale of U.S. Steel, a symbol of U.S. industrialization, to a foreign company. However, after holding a summit with Japanese Prime Minister Shigeru Ishiba in February following his inauguration, he indicated that he could consider it if it were in the form of investment rather than an acquisition, and directed CFIUS to review the transaction after a phone call with Prime Minister Ishiba last month. This led to speculation that President Trump could reverse the Biden administration's decision to deny the acquisition.
Before the conclusion of CFIUS's review, Japan Steel proposed an investment of $14 billion following the acquisition of U.S. Steel. This amount is 10 times the initial proposed investment of $1.4 billion. The plan is to allocate $4 billion of the total investment for the construction of new steel mills. When adding the acquisition amount and the subsequent investment plans, the total amount Japan Steel would invest in U.S. Steel is approximately 40 trillion won.
Domestic steel corporations such as Hyundai Steel, POSCO, and SeAH Steel are expected to compete with the Japan Steel and U.S. Steel alliance in the U.S. market. Demand for steel in the U.S. is increasing under policies aimed at revitalizing U.S. manufacturing in sectors like electric vehicles, shipbuilding, and power infrastructure. Korean and Japanese steel companies are in a rush to secure local production bases in the U.S. to avoid the tariff barriers imposed by the Trump administration.
The top two domestic steel corporations, POSCO and Hyundai Steel, will jointly construct a steel mill in the U.S. After Hyundai Steel announced in March its plans to invest $5.8 billion (approximately 8 trillion won) to build a steel mill specializing in automotive plates in Louisiana, POSCO decided to co-invest. This is aimed at targeting the growth of the U.S. electric vehicle market. POSCO and Hyundai Steel will also collaborate in the field of secondary battery materials, which are key to electric vehicles, to build a supply chain for steel and advanced materials in the U.S.